Darrell Issa, the most senior Republican on the House Oversight Committee, is putting significant pressure on the Toyota CEO (Akio Toyoda - seems like a long dynasty) to appear before a Senate hearing committee on Toyota's accelerator and brake problems. Sending his North American head does not seem to be enough for this hard-nosed Republican. Surely the head of North American operations is equally accountable, with the trust invested in him by his Japanese boss for sales of cars to American consumers? Or is Mr Issa after his moment of glory, in shaming an "alien" CEO? Please.
On a technical level, what's interesting is Toyota Motor's proposed fix to the accelerator problem. As described by the FT, this would kill the engine when the accelerator and brake were pressed simultaneously. Meaning that if I had to take off from my driveway in ice, I'd be out of luck....
OK, it has never snowed in San Carlos :)
Wednesday, February 17, 2010
Friday, February 12, 2010
The Pigs and the Stupid
Niall Ferguson is a Glaswegian economic historian, who is the author of the book "The Ascent of Money". I bought the DVD (published in the US by PBS) for a friend, and recommended the book to another friend last night in Borders. She promptly bought it. If you were to choose between the two, choose the DVD, as the footage of Venice is breathtaking, and gives a visual sense of the sheer power of the Italian Mendici family, and its lasting legacy.
In his piece in the FT today, Mr Ferguson suggests that the crisis currently affecting Greece will soon reach America. A Libertarian friend of mine, whom I took for a walk to the Stanford dish, suggested, like Mr Ferguson does, that the multiplier effect of government spending is low, and therefore the effects of an economic stimulus are likely to be a waste of public money.
While it's very clear that the current US administration has inherited much of the current deficit (paid for by bonds bought by the Chinese), it's also clear that now the cash cow's run dry (China now expects to buy a token 5% of new issue, and threatens to liquidate existing holdings every time the Dalai Lama shows up in DC), America is planning some austerity measures of its own. By austerity I mean a freeze on "non-essential" spending for the next three years.
To answer Mr Ferguson's question: "But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic."
The answer is "NO", because an exogenous shock will see America through, like it did in the early 90s (with the Internet boom) and like it did in 2003 (with the housing boom). In this case, it will be out of the government's control. But it will happen.
Put your wallet away, Mr Obama.
Trust me.
PS As I've received a few emails about the title, I am not calling anybody a "pig" or "Stupid". These are, in fact, derogatory acronyms for countries asking for bailouts or about to require bailouts, and have been banned by the FT. To give you a clue, the G in Pig stands for Greece. Figure out the rest, or see the FT
In his piece in the FT today, Mr Ferguson suggests that the crisis currently affecting Greece will soon reach America. A Libertarian friend of mine, whom I took for a walk to the Stanford dish, suggested, like Mr Ferguson does, that the multiplier effect of government spending is low, and therefore the effects of an economic stimulus are likely to be a waste of public money.
While it's very clear that the current US administration has inherited much of the current deficit (paid for by bonds bought by the Chinese), it's also clear that now the cash cow's run dry (China now expects to buy a token 5% of new issue, and threatens to liquidate existing holdings every time the Dalai Lama shows up in DC), America is planning some austerity measures of its own. By austerity I mean a freeze on "non-essential" spending for the next three years.
To answer Mr Ferguson's question: "But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic."
The answer is "NO", because an exogenous shock will see America through, like it did in the early 90s (with the Internet boom) and like it did in 2003 (with the housing boom). In this case, it will be out of the government's control. But it will happen.
Put your wallet away, Mr Obama.
Trust me.
PS As I've received a few emails about the title, I am not calling anybody a "pig" or "Stupid". These are, in fact, derogatory acronyms for countries asking for bailouts or about to require bailouts, and have been banned by the FT. To give you a clue, the G in Pig stands for Greece. Figure out the rest, or see the FT
Friday, February 5, 2010
Less proprietary trading please!
What I love about the proposed new legislation (that the media informs us, is aimed at "reigning in" banks, giving us the impression that they've become wild horses) is that it will limit proprietary trading. PT is what disgusted me enough to abandon dreams of a career in London's financial district and instead work on something "real" ("real" in this case being the Network Computer).
Simply put, proprietary trading allows bank employees to take bets with the bank's own money - in things like commodities, Forex, equities, fixed income instruments and corporate and government bonds. Makes markets more efficient, say the bankers through their Porsche windows at traffic lights. Makes my petrol and food more expensive, I say, remembering volatility in petrol prices caused by huge speculative effort (banks giving the most weight to this). And airlines having an excuse adding a "fuel surcharge" to their fares (to offset their non-fuel operational costs).
"Capping the overall size of banks" sounds knee jerk to me. But if it can clip the wings of the bank-that-one-dare-not-name, I'm all in favour.
In short, I'd say that the government's plan needs some time to be thought out. With non-lobbyist bankers representing the banks' interests. "How big should a bank be", "what reserve limits should be enforced", "what would the underwriting limits be for commercial lending", "how risky can their bets be" are all questions that need to be answered.
Meanwhile, I'm off to the ranch to reign in some Mustangs (the kind that don't have an investment banker sitting inside).
Simply put, proprietary trading allows bank employees to take bets with the bank's own money - in things like commodities, Forex, equities, fixed income instruments and corporate and government bonds. Makes markets more efficient, say the bankers through their Porsche windows at traffic lights. Makes my petrol and food more expensive, I say, remembering volatility in petrol prices caused by huge speculative effort (banks giving the most weight to this). And airlines having an excuse adding a "fuel surcharge" to their fares (to offset their non-fuel operational costs).
"Capping the overall size of banks" sounds knee jerk to me. But if it can clip the wings of the bank-that-one-dare-not-name, I'm all in favour.
In short, I'd say that the government's plan needs some time to be thought out. With non-lobbyist bankers representing the banks' interests. "How big should a bank be", "what reserve limits should be enforced", "what would the underwriting limits be for commercial lending", "how risky can their bets be" are all questions that need to be answered.
Meanwhile, I'm off to the ranch to reign in some Mustangs (the kind that don't have an investment banker sitting inside).
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